MIT study finds air quality co-benefits of US carbon policies can significantly offset costs, depending upon the policy

25 August 2014

The human health benefits associated with improvements in air quality related to the reduction in greenhouse gas emissions improvements can offset 26–1,050% of the cost of US carbon policies, depending upon the type of policy, according to a new study by a team from MIT. (Air quality co-benefits are additional to climate benefits realized from reduced CO2 emissions.)

In a paper published in the journal Nature Climate Science, the MIT researchers took a systems-level approach to analyzing how climate policies influence air quality, focusing on US emissions of O3 and PM2.5 precursors through 2030. They assessed the costs and air-quality-related benefits of three potential national-scale climate policies, examining the entire pathway linking climate policies, economic sector responses, emissions, regional air quality, human health and related economic impacts.

Carbon-reduction policies significantly improve air quality. In fact, policies aimed at cutting carbon emissions improve air quality by a similar amount as policies specifically targeting air pollution.

—Noelle Selin, co-author

Selin and colleagues compared the health benefits to the economic costs of three climate policies: a clean-energy standard, a transportation policy, and a cap-and-trade program. The three were designed to resemble proposed US climate policies, with the clean-energy standard requiring emissions reductions from power plants similar to those proposed in the Environmental Protection Agency’s Clean Power Plan.

More flexible policies that minimize costs, such as cap-and-trade standards, have larger net co-benefits than policies that target specific sectors (electricity and transportation). Although air quality co-benefits can be comparable to policy costs for present-day air quality and near-term US carbon policies, potential co-benefits rapidly diminish as carbon policies become more stringent.

—Thompson et al.

The researchers found that savings from avoided health problems could recoup 26% of the cost to implement a transportation policy, but up to to 10.5 times the cost of implementing a cap-and-trade program.

The difference depended largely on the costs of the policies, as the savings—in the form of avoided medical care and saved sick days—remained roughly constant: Policies aimed at specific sources of air pollution, such as power plants and vehicles, did not lead to substantially larger benefits than cheaper policies, such as a cap-and-trade approach.

Savings from health benefits dwarf the estimated $14 billion cost of a cap-and-trade program. At the other end of the spectrum, a transportation policy with rigid fuel-economy requirements is the most expensive policy, costing more than $1 trillion in 2006 dollars, with health benefits recouping only a quarter of those costs.

The price tag of a clean energy standard fell between the costs of the two other policies, with associated health benefits just edging out costs, at $247 billion versus $208 billion.

The study is the most detailed assessment to date of the interwoven effects of climate policy on the economy, air pollution, and the cost of health problems related to air pollution. The MIT group paid especially close attention to how changes in emissions caused by policy translate into improvements in local and regional air quality, using comprehensive models of both the economy and the atmosphere.

In 2011, 231 counties in the US exceeded the EPA’s regulatory standards for ozone, the main component of smog. Standards for fine particulate matter were exceeded in 118 counties.

While cutting carbon dioxide from current levels in the US will result in savings from better air quality, pollution-related benefits decline as carbon policies become more stringent. Selin cautions that after a certain point, most of the health benefits have already been reaped, and additional emissions reductions won’t translate into greater improvements.

The study shows that climate policies can also have significant local benefits not related to their impact on climate, says Gregory Nemet, a professor of public affairs and environmental studies at the University of Wisconsin at Madison who was not involved in the study.

A particularly notable aspect of this study is that even though several recent studies have shown large co-benefits, this study finds large co-benefits in the US, where air quality is assumed to be high relative to other countries. Now that states are on the hook to come up with plans to meet federal emissions targets by 2016, you can bet they will take a close look at these results.